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Introducing #Blockchain Impact Award Winner Grassroots Economics Foundation #Kenya

Fri, 02/22/2019 - 1:32pm  |  Timbuktu Chronicles
From Newsweek:
Almost a decade ago—when bitcoin was mostly a niche discussion topic on cryptography forums—Grassroots Economics Foundation was challenging the idea that banks should have a monopoly on currency...[more]

Insurtech Research Report: The trends & technologies allowing insurance startups to compete

Thu, 02/21/2019 - 11:09pm  |  Clusterstock

Tech-driven disruption in the insurance industry continues at pace, and we're now entering a new phase — the adaptation of underlying business models. 

That's leading to ongoing changes in the distribution segment of the industry, but more excitingly, we are starting to see movement in the fundamentals of insurance — policy creation, underwriting, and claims management. 

This report from Business Insider Intelligence, Business Insider's premium research service, will briefly review major changes in the insurtech segment over the past year. It will then examine how startups and legacy players across the insurance value chain are using technology to develop new business models that cut costs or boost revenue, and, in some cases, both. Additionally, we will provide our take on the future of insurance as insurtech continues to proliferate. 

Here are some of the key takeaways:

  • Funding is flowing into startups and helping them scale, while legacy players have moved beyond initial experiments and are starting to implement new technology throughout their businesses. 
  • Distribution, the area of the insurance value chain that was first to be disrupted, continues to evolve. 
  • The fundamentals of insurance — policy creation, underwriting, and claims management — are starting to experience true disruption, while innovation in reinsurance has also continued at pace.
  • Insurtechs are using new business models that are enabled by a variety of technologies. In particular, they're using automation, data analytics, connected devices, and machine learning to build holistic policies for consumers that can be switched on and off on-demand.
  • Legacy insurers, as opposed to brokers, now have the most to lose — but those that move swiftly still have time to ensure they stay in the game.

 In full, the report:

  • Reviews major changes in the insurtech segment over the past year.
  • Examines how startups and legacy players across distribution, insurance, and reinsurance are using technology to develop new business models.
  • Provides our view on what the future of the insurance industry looks like, which Business Insider Intelligence calls Insurtech 2.0.
Subscribe to an All-Access pass to Business Insider Intelligence and gain immediate access to: This report and more than 250 other expertly researched reports Access to all future reports and daily newsletters Forecasts of new and emerging technologies in your industry And more! Learn More

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Nearly three-quarters of bills will be paid digitally by 2022 — this is how banks can stay ahead of the trillion-dollar opportunity

Thu, 02/21/2019 - 10:04pm  |  Clusterstock

This is a preview of a research report from Business Insider Intelligence, Business Insider's premium research service. To learn more about Business Insider Intelligence, click here.

Between housing costs, utilities, taxes, insurance, loans, and more, US adults paid an estimated $3.9 trillion in bills last year.

That market is growing slowly, but it’s changing fast — more than ever before, customers are moving away from paying bills via check or cash and toward paying online, either through their banks, the billers themselves, or using a third-party app.

Thanks to rising customer familiarity with digital payments, an increase in purchasing power among younger consumers more interested in digital bill pay, and a rise in digital payment options, nearly three-quarters of bills will be paid digitally by 2022, representing a big opportunity for players across the space.

In theory, banks should be in a great position to capitalize on this shift. Nearly all banks offer bill payment functionality, and it’s a popular feature. Issuers also boast an existing engaged digital user base, and make these payments secure. But that isn’t what’s happening — even as digital bill pay becomes more commonplace, banks are losing ground to billers and third-party players. And that’s not poised to change unless banks do, since issuer bill pay is least popular among the youngest customers, who will be the most important in the coming year.

For banks, then, that makes innovation important. Taking steps to grow bill pay’s share can be a tough sell for digital strategists and executives leading money movement at banks, and done wrong, it can be costly, since it often requires robust technological investments. But, if banks do it right, bill pay marks a strong opportunity to add and engage customers, and in turn, grow overall lifetime value while shrinking attrition.

Business Insider Intelligence has put together a detailed report that explains the US bill pay market, identifies the major inflection points for change and what’s driving it, and provides concrete strategies and recommendations for banks looking to improve their digital bill pay offerings.

Here are some key takeaways from the report:

  • The bill pay market in the US, worth $3.9 trillion, is growing slowly. But digital bill payment volume is rising at a rapid clip — half of all bills are now digital, and that share will likely expand to over 75% by 2022. 
  • Customers find it easiest to pay their bills at their billers directly, either through one-off or recurring payments. Bank-based offerings are commonplace, but barebones, which means they fail to appeal to key demographics.
  • Issuers should work to reclaim bill payment share, since bill pay is an effective engagement tool that can increase customer stickiness, grow lifetime status, and boost primary bank status.  
  • Banks need to make their offerings as secure and convenient as biller direct, market bill pay across channels, and build bill pay into digital money management functionality.

In full, the report:

  • Sizes the US bill pay market, and estimates where it’s poised to go next.
  • Evaluates the impact that digital will have on bill pay in the US and who is poised to capitalize on that shift.
  • Identifies three key areas in which issuers can improve their bill pay offerings to gain share and explains why issuers are losing ground in these categories.
  • Issues recommendations and defines concrete steps that banks can take as a means of gaining share back and reaping the benefits of digital bill pay engagement.
Get The Bill Pay Report

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After topping Wall Street's estimates, Roku's in 'a strong position' to take on Amazon and other rivals, says its CFO (ROKU)

Thu, 02/21/2019 - 8:59pm  |  Clusterstock

  • Roku, which has transformed itself into an ad-based business, is in a prime position to compete in the free streaming video market, Steve Louden, its chief financial officer said.
  • It not only knows what people are watching, it can direct viewers to channels that run its ads, including its own Roku Channel, he said.
  • That gives it a leg up on some of its competitors, such as Amazon, which just launched its own free streaming video channel.

Roku isn't worried about Amazon or anyone else horning in on its cash cow.

The electronics maker has transformed itself in recent years into an advertising business, thanks in no small part to the Roku Channel, an advertising-supported free streaming video service that's available on Roku devices and through the web. Last month, though, Amazon launched a rival service called Freedive from its IMDb unit that threatens to steal viewers and ad dollars from Roku's offering.

But that's not how Steve Louden, Roku's chief financial officer, sees it. Amazon's entry — along with similar services from YouTube, Vudu, and others — just serve as "validation" for the Roku Channel and the ad-supported streaming business in general.

"We're strong supporters of ad-supported content," Louden told Business Insider in an interview on Thursday, just after the company reported its fourth-quarter results.

Read this: Amazon's got its eyes set on yet another market — and one high-flying upstart should be worried

Roku topped analyst expectations as revenue from its platform business — which includes its advertising sales — jumped 77% from the holiday period of 2017.

Roku is in "a strong position"

The streaming video company is in a better position than many of its rivals to capitalize on ad-supported video market, Louden said. Its control of not just a streaming channel, but a streaming media platform — through its Roku streaming boxes and smart televisions that run its operating system — gives it important data on users' viewing habits that competitors don't have, he said. Through its platform, Roku also has the ability to steer viewers to the Roku Channel and other places that run its video ads.

"That puts us in a strong position," he said.

Amazon too has its own platform in the form of its Amazon Fire TV devices, and it has plenty of data on viewing habits through that, its Amazon Fire tablets, and its Prime Video service. But Louden seemed unconcerned, suggesting that Amazon and many of Roku's other competitors can't fully match up with it. Roku can offer advertisers both the data they need to target their ads and a large viewership for them.

"That's where a lot of folks have gaps," he said.

Here's what Roku reported and how it compared with Wall Street's expectations:

  • Fourth-quarter (Q4) revenue: $275.7 million. Analysts had forecast $262.4 million.
  • Q4 earnings per share (EPS): 5 cents. Wall Street was expecting 3 cents a share.
  • First-quarter (Q1) revenue (company guidance): $185 million to $190 million. Analysts had projected $188.8 million.
  • Q1 EPS (guidance): Roku forecast that it will lose $28 million to $32 million, which works out to a per-share loss of 23 to 26 cents, assuming its share count stays stable. Wall Street was forecasting a loss of 12 cents a share.
  • 2019 full-year revenue (guidance): $1 billion to $1.025 billion. Analysts had forecast for $985.4 million.
  • 2019 EPS (guidance): The company projected a loss of between $80 million and $90 million, which is about 65 cents to 73 cents a share, assuming its share count remains the same. Analysts had predicted a full-year loss of 23 cents a share.

Roku's stock jumped $2.72, or 5%, to $54.20 in after-hours trading. Its shares closed regular trading off $2.16, or 4%, to $51.48.

SEE ALSO: Roku's CEO says his business is doing 'great' — even if investors aren't convinced

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NOW WATCH: How Apple went from a $1 trillion company to losing over 20% of its share price

People are finding hidden cameras on some American Airlines and Singapore Airlines planes. Here's what that's about

Thu, 02/21/2019 - 6:31pm  |  Clusterstock

  • In-flight entertainment (IFE) systems are a ubiquitous part of air travel these days.
  • Recently, passengers spotted cameras built into the IFE systems on American Airlines and Singapore Airlines flights.
  • According to both airlines, the cameras are disabled and will not be activated.
  • Airlines purchase their IFE systems from third-party manufacturers, and the cameras were built into the system by those manufacturers.
  • The American Airlines system was made by Panasonic, and the Singapore Airlines systems were made by Panasonic and Thales.

In-flight entertainment (IFE) systems are a ubiquitous part of air travel these days — especially on long, transoceanic flights. For the most part, they are innocuous screens on the back of seats designed to entertain us while we jet across the sky.

Recently, however, a few eagle-eyed travelers have noticed that while we watch the screens, they could be watching us.

This week, one passenger aboard a Singapore Airlines flight noticed a camera built into his IFE screen. Another passenger noticed a similar camera aboard his American Airlines flight.

Is someone spying on us? According to the airlines, no.

In a statement to Business Insider, American Airlines said:

"Cameras are a standard feature on many in-flight entertainment systems used by multiple airlines. Manufacturers of those systems have included cameras for possible future uses such as seat-to-seat video conferencing. While these cameras are present on some American Airlines in-flight entertainment systems as delivered from the manufacturer, they have never been activated and American is not considering using them."

Singapore Airlines echoed those sentiments.

"Some of our newer IFE systems provided by the original equipment manufacturers do have a camera provisioned and embedded in the hardware," an airline spokesman told Business Insider. "These cameras have been intended by the manufacturers for future developments."

"These cameras are permanently disabled on our aircraft and cannot be activated on board," he added. "We have no plans to enable or develop any features using the cameras."

Airlines don't make their own IFE systems. They may be able to tailor the content and presentation of the system, but the hardware is purchased from suppliers. In the case of American Airlines, the IFE system in question comes from Panasonic while the Singapore Airlines systems come from Panasonic and Thales.

Panasonic was not immediately available for comment, but a Thales spokesman told Business Insider that the cameras in their systems are disabled and cannot be activated in-flight.

Read more: I flew on the world's longest flight in premium economy — here's what the 18-hour voyage was like.

The camera-equipped IFE systems can be found in the premium economy cabins of select American Airlines Boeing 777-200s, 777-300ERs, and Airbus A330-200s.

The cameras are a bit more pervasive in Singapore's fleet. They can be found in the business, premium economy, and economy cabins of the airline's Airbus A350-900s, Airbus A380s, Boeing 777-300ERs, and Boeing 787-10s.

Thales and Panasonic Avionics are two of the most prominent original-equipment manufacturers in the airline industry. This means these systems may be on planes beyond just Singapore and American Airlines.

SEE ALSO: Delta is the first US airline to fly the new Airbus A220 jetliner. Here are its coolest features.

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NOW WATCH: Watch what happens when you put a 240cc Honda dirt bike engine in a toy Barbie car

Johnson & Johnson is being investigated by the SEC over fears its baby powder may cause cancer — here's how worried you should be

Thu, 02/21/2019 - 6:29pm  |  Clusterstock

  • Johnson & Johnson is being investigated by the US Securities and Exchange Commission after questions surfaced about the safety of the company's baby powder.
  • The investigation and subpoenas come on the heels of a Reuters report that suggested the company knew for years that its baby powder contained small amounts of asbestos, which is a human carcinogen.
  • The reason there could be asbestos in baby powder is that one of the primary ingredients is talc: a mineral that's often found and mined near asbestos.
  • Unfortunately, most of the scientific studies to date on baby powder have relied on flawed methods. The evidence we do have doesn't suggest it directly increases cancer risk in a serious way.
  • Johnson & Johnson hasn't released any information to the public about how much asbestos is or was in their product.

Let's be clear: If you know that your baby powder is pure, there's nothing dangerous about slapping some on a newborn or sprinkling a little bit in some smelly shoes. 

But for Johnson & Johnson, which has come under fire recently due to concerns about contamination in its baby powders, millions of dollars are now riding on a few tricky questions. The first is: did the company know that its powder may have contained some asbestos when they sold it? And second, if there was asbestos in the baby powder, how much was there, and was it enough to cause harm? 

The questions stem from the use of talcum powder in baby powder; talc can sometimes be contaminated with asbestos — a known cancer-causer — because the two naturally occurring Earth minerals are often mined in close proximity. 

Johnson & Johnson disclosed on Wednesday that federal regulators were raising questions about the company's baby powders in a filing with the US Securities and Exchange Commission (SEC). 

That federal investigation comes on the heels of a series of lawsuits about baby powder, some decades in the making. The most recent suit was decided in July: A jury in Missouri ordered Johnson & Johnson to pay up $4.7 billion to 22 women who claimed the company's baby powder caused their cases of ovarian cancer.

The company maintains that's not the case.

"Johnson & Johnson remains confident that its products do not contain asbestos and do not cause ovarian cancer," the company said in a statement after that verdict was announced. 

Questions remain about Johnson & Johnson's product

There are clues that suggest Johnson & Johnson baby powder may have had some asbestos in it, and that people inside the company knew about it. In December 2018, a Reuters investigation revealed internal documents from the company that showed that from at least 1971 to the early 2000s, "the company's raw talc and finished powders sometimes tested positive for small amounts of asbestos." 

After that Reuters report, Johnson & Johnson CEO Alex Gorsky said again that there was no asbestos in the company's products. 

"We know that our talc is safe," Gorsky said in a video message on the company's website. He added that the company uses the "purest, safest, pharmaceutical-grade talc on Earth," and that the baby powder "does not cause cancer or asbestos-related disease."

Read More: 32 of the most scientifically sound things you can do right now to reduce your risk of developing cancer

The US Food and Drug Administration (FDA) conducted a study from 2009 to 2010 that checked 34 different talc cosmetic products, including baby powders, and found no asbestos fibers. Another study of earlier powders in the 1960s and 70s also found no evidence of asbestos. But Johnson & Johnson has not yet revealed any internal information about asbestos tests or concentrations, and without that specific data, it's hard to know exactly what was or is in its baby powder.

The messy link between talc and asbestos

Asbestos miners have been diagnosed with lung cancer for centuries, but the studies investigating whether talc miners get lung cancer are mixed

"To prevent contamination of talc with asbestos, it is essential to select talc mining sites carefully and take steps to purify the ore sufficiently," the FDA says on its website.

Some studies have suggested there's a link between using talc and getting cancer — women who use baby powder report higher instances of ovarian cancer than others. But even the researchers behind those studies are skeptical about their results, since most of that research was conducted by surveying women about their powder use years later.

Epidemiologist Joellen Schildkraut, a professor of public health at the University of Virginia, has said that studies to date on talc powder and cancer — including some of her own — don't meet scientific criteria for causality. Part of the problem, Schildkraut said, is that media coverage and publicity that call into question the safety of baby powder have skewed people's perceptions and memories. That can influence how they report their use of the powders.  

"We did see a relationship," between powder use and cancer, she told Business Insider. "But we also detected some bias in the way our data was collected."

In other words, after reports about baby powder contamination gained attention, more people in the studies started reporting they'd used talc powder in the past. 

"That's a big flag," Schildkraut said. "I don't think you can be conclusive. I don't think the data are conclusive." 

Cancer epidemiologist Paul Pharoah is a leading expert on baby powder risks and a professor at the University of Cambridge. He agrees with Schildkraut.

"It's almost impossible for science to prove a negative," he told Business Insider. "That's one of the issues around conspiracy theories in science. You can't prove to the conspiracy theorist the fact that something doesn't exist." 

Pharoah acknowledged, however, that he has a potential conflict of interest here: He was once a paid consultant for one of Johnson & Johnson's law firms. But he maintains that his "opinion pre-dates any payment." 

Pharoah said it doesn't make sense that women who use baby powder regularly would have higher ovarian cancer rates but not higher rates of any other cancers in that area of the body. There's no suggestion of increased frequency of cervical, vaginal, or endometrial cancer in women who use talc, he added.

"If it were really causing cancer, you would've thought that would've been a problem, but it isn't," Pharoah said, adding, "if you dust talcum powder on your genitals, it's got quite a long way to go in a woman before it gets to the tissues of the ovary."

The US National Institutes of Health and other researchers around the world have also found no evidence that increased genital exposure to talc ups a woman's risk of getting ovarian cancer.

Pharoah even worries that the recent court cases could cause undue anguish for some women — "because if women get ovarian cancer, they may well beat themselves up about the fact that they used talc in the past," he said. 

SEE ALSO: The keto diet could make certain cancer treatments more effective in mice, a study found — and a human trial is moving forward

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NOW WATCH: Johnson & Johnson just lost another multi-million dollar lawsuit over cancer risks associated with baby powder

The 'clock has struck midnight' for Apple: It needs to buy a major Hollywood studio this year or lose the streaming war to Netflix and Amazon (AAPL, DIS, NFLX, AMZN)

Thu, 02/21/2019 - 5:40pm  |  Clusterstock

  • Apple needs to buy a video-production studio to boost its upcoming streaming-video offerings and its larger services business, Wedbush analyst Daniel Ives said.
  • The decision on whether to do such a deal is a crucial one for the company, he said.
  • A successful acquisition could make Apple a significant player in video streaming, and boost its revenue and share price.
  • The failure to make such a deal would leave Apple's video effort and its overall business struggling, Ives said.

The impending launch of Apple's streaming-video service is going to drive the company to a crucial crossroads, Wedbush analyst Daniel Ives said.

For the service to catch on with customers — and successfully compete against rival services from Netflix, Disney, Amazon, and others — Apple's going to need to be able to offer subscribers plenty of its own shows and movies, Ives said in a new note.

The iPhone maker has two choices before it:

  • Continue to develop content on its own.
  • Or buy a video-production studio that already has a deep catalog of movies and shows.

To Ives, the choice is stark, and the right decision obvious.

"Now is the time for Apple to rip off the band-aid and finally do significant content [mergers and acquisitions] with the landscape ripe," Ives said in the note. "Otherwise it will be a major strategic mistake that will haunt the company for years to come, as content is the rocket fuel in the services engine and currently missing in the portfolio."

Ives has been beating this drum for a while now. Last month, he listed some of the companies that Apple could acquire to bulk up its content offerings, naming A24, which was behind "Lady Bird," and Lionsgate, which produced "The Hunger Games" series.

Read more: Apple needs to get serious about video. Here are 3 Hollywood studios it could buy to boost its new streaming service.

For Apple, the stakes are high

But his latest note emphasized what he sees as the stakes of the decision. Apple's iPhone sales are set to decline significantly this year. The company has largely missed out on the smart-speaker and broader smart-home markets. It hasn't been able to develop Apple Watch into a broad, mainstream success. And it's struggled in other product areas, including artificial intelligence and self-driving cars.

Apple "has either invested too little, made strategic blunders, and/or been late to the game on key consumer technology areas," Ives said.

The big bright hope for the company is in its services business, which includes everything from its Apple Music streaming service and iCloud storage offerings to the licensing revenue it gets for making Google the default search engine on the iPhone. Apple's services revenue has been growing at an annual rate of more than 20% for the last two years, and the company has forecast that it will hit $50 billion in revenue by 2020. 

But for the business to really take off, Apple needs to convince more customers to sign up for its services, and to do that, it needs a streaming-video service, Ives said. If Apple is successful, it's streaming business could have 100 million subscribers in three to five years, he said. That alone would add about $15 a share to Apple's stock price — or about $70 billion to its valuation, he said. Apple's shares closed Thursday at $171.06, giving it a market capitalization of $807 billion.

"A key missing piece in the Apple portfolio was a streaming video content service that we strongly believe will prove to be the 'tip of the spear'" in getting more of its customers to sign up for its services, Ives said. "The services business," he continued, "remains the wild card in driving the valuation higher for Apple"

Apple risks being left behind by rivals

But in order for the company's video offerings to be successful and to hit the subscriber numbers Ives is predicting, it's going to need a library that's well-stocked with movies and shows, he said. Although Apple has already been investing in such content, it doesn't yet have much to offer, especially compared with Netflix and its other rivals. And its investment in content — about $1 billion a year — is a fraction of what several of its competitors are spending, much less the industry as a whole, Ives said.

To catch up, Apple's going to need to do something that it's done only once in the past — make a major acquisition, Ives said. The company's biggest purchase to date was its $3 billion acquisition of Beats in 2014. But it may have to spend significantly more than that to get a sizeable library of movies and shows, he suggested. It has plenty of money to make an acquisition, he said; Apple ended last year with about $245 billion in cash and marketable securities.

"While acquisitions have not been in Apple's core DNA, the clock has struck midnight for Cupertino," he said. "Building content organically is a slow and arduous path, which highlights the clear need for Apple to do larger, strategic M&A around content over the coming year to 'double down' and drive the services flywheel."

The choice is really a no-brainer, Ives said. If Apple makes a smart content acquisition, it's likely to develop a successful video business and continue building its services segment. If it doesn't make such an acquisition, its video business and its larger services effort are imperiled, he said.

Making such an acquisition "is absolutely critical for Apple's growth prospects going forward," Ives said. Failure to do a deal this year, he added, will leave the company with an "Everest-like battle in its quest to become a formidable streaming player."

SEE ALSO: Facebook and Twitter are following in Apple’s footsteps by hiding some of their most important numbers. Here’s why investors should be concerned

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Freight startup Flexport just nabbed $1 billion through a SoftBank-led funding round, and it's now worth $3.2 billion

Thu, 02/21/2019 - 5:31pm  |  Clusterstock

  • Freight forwarder Flexport is now valued at $3.2 billion.
  • That's after a $1 billion investment round led by the SoftBank Vision Fund.
  • Founded in 2013, Flexport is already the 11th-largest freight forwarder in the world.


Flexport has driven big-name investors into the less-than-thrilling world of logistics — Peter Thiel, Y Combinator, Google's GV, Bloomberg Beta, and even Ashton Kutcher. 

And now, the freight forwarder, which operates globally, can add another enviable investor to its list: SoftBank. The Japanese bank's Vision Fund just led a $1 billion investment round into Flexport, which is now valued at $3.2 billion

Flexport CEO Ryan Petersen wrote today that the funding will be used for "creating incredible experiences" for its nearly-10,000 clients and suppliers, who are located across 200 countries.  

Read more: Amazon's CFO highlighted the power of it perfecting its own delivery capabilities, and it's a clear warning shot to UPS and FedEx

Founded in 2013, Flexport is already the 11th-largest freight forwarder in the world. 

Usually, retailers don't directly manage how their manufactured goods move from, say, a factory in China, across the Pacific via ocean freighter, from a California port to the train tracks, and then from the train to truck to warehouse. Instead, retailers turn that complicated process over to a freight forwarder.

Flexport is different from others in the $2 trillion industry in that it relies on a technology-enabled platform to connect companies and those who move goods via air and ocean. Flexport said that allows companies to quickly assess where their goods are and when they're arriving, while cutting down on tradition freight forwarding costs.

Such platforms have become common across the logistics industry. In trucking, startups like Uber Freight, Transfix, and Convoy are directly connecting retailers with trucking companies or truckers. 

SEE ALSO: Uber Freight is helping combat a $1.3 billion problem that the trucking industry has ignored for years

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NOW WATCH: Go inside a $45 million car collection with over 450 cars

Share your opinion — become a BI Insider!

Thu, 02/21/2019 - 5:29pm  |  Clusterstock

As a dedicated Business Insider reader, we’d like to invite you to join our BI Insiders Panel, an exclusive online community of Business Insider readers!

Here are some of the TOP benefits of being a BI Insider!

  • Earn points towards cutting-edge research reports (a $495 value) from the Business Insider Intelligence report store.
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As a BI Insider, you'll be invited to take online surveys via email a few times a month to provide opinions and insights on a variety of topics and emerging trends, based on your personal and professional experiences. 

To become a BI Insider, you'll be asked to complete a short survey, after which you'll receive a notification within 24 hours to let you know if you've qualified. We want to hear from you!


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Southwest has canceled hundreds of flights because of weather and maintenance issues — and passengers are furious (LUV)

Thu, 02/21/2019 - 5:18pm  |  Clusterstock

  • Southwest Airlines canceled nearly 400 flights on Thursday and delayed hundreds more.
  • In a statement to Business Insider, a Southwest spokesperson pointed to a statement from head of operations, Mike Van de Ven on Wednesday, in which the executive blamed ongoing negotiations with a mechanics union for an "unprecedented" number of flight delays.
  • Some passengers were frustrated and took to Twitter to vent. 

Southwest Airlines canceled nearly 400 flights on Thursday and delayed hundreds more as its scuffle with a mechanics union and unusual winter weather in Las Vegas wreaked havoc on its operations.

By 3 pm Eastern, the low-cost carrier had canceled 388 flights, or 9% of its scheduled service, and delayed 488 others, according to flight aware, leaving some customers furious.

@SouthwestAir what did I do wrong?

You canceled my flight this morning, then canceled my rebooked flight.

Then I actually drove a rental car 4 hours to make my meeting and you cancel my return flight home...

I think we need to chat about our relationship.

— Josh Sinclair (@vSinclairJ) February 21, 2019

In a statement to Business Insider, a Southwest spokesperson pointed to a statement from head of operations, Mike Van de Ven on Wednesday, in which the executive blamed ongoing negotiations with a mechanics union for an "unprecedented" number of flight delays.

Read more: Southwest has blamed a mechanics union for hundreds of canceled flights — and the stock is tanking

"The airline continues to experience a higher-than-average number of out-of-service aircraft and is operating under a staffing protocol enacted late last week to maximize availability of Mechanics to address maintenance items and safely return aircraft to service," the spokesperson added.

@SouthwestAir let’s see they cancel both of my flights to and from Vegas at the very last minute knowing that Southwest is having union issues. Those union issues were not disclosed to me at the time of ticket purchase.

— darrell (@darrell33616548) February 21, 2019

@SouthwestAir let’s see they cancel both of my flights to and from Vegas at the very last minute knowing that Southwest is having union issues. Those union issues were not disclosed to me at the time of ticket purchase.

— darrell (@darrell33616548) February 21, 2019

@SouthwestAir trying to leave Vegas today at 5, flight cancelled at ten this morning. I’ve been on hold for 1 hr 30 minutes. All flights today and tomorrow are full. #southwestsucks

— Matt Gilbert (@Jaholibop) February 21, 2019

@SouthwestAir been on hold over an hour to try to find out about getting a connecting flight after a delay in Indy. Is anyone there?

— Orion (@OrionBuckingham) February 21, 2019



SEE ALSO: Assigned seats on Southwest? Here's how a major change would set the company apart from other airlines

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NOW WATCH: Watch what happens when you put a 240cc Honda dirt bike engine in a toy Barbie car

The CEO of Hewlett Packard Enterprise celebrated his one-year anniversary with a 'beat and raise' earnings report that's boosting the stock (HPE)

Thu, 02/21/2019 - 5:18pm  |  Clusterstock

  • Hewlett Packard Enterprise shares are jumping in after-hours trading after the company handily beat Wall Street expectations on quarterly profit. 
  • The good news: Intelligent Edge, a business unit that CEO Antonio Neri has called key to the company's future prospects, grew 5% from the year-ago period. 
  • The better news: It's raising its guidance on earnings per share for the 2019 fiscal year, which ends in 2019. 
  • The less-good news: HPE's overall revenues were down 2% for the quarter from the same period of 2017, and the unit encompassing its traditional data center hardware businesses shrunk 3% over the same period.

Shares of Hewlett Packard Enterprise are up as high as 3% in after-hours trading after announcing quarterly profits that blew away Wall Street's modest expectations, and raising its guidance for the fiscal year. 

Here are the key figures reported by HPE on Thursday for its December quarter: 

  • Revenue of $7.55 billion, just about in line with Wall Street expectations, and down 2% from Q4 2017.
  • Earnings per share (non-GAAP) of $0.42, ahead of Wall Street's expectation of $0.35 — which would have been flat from the year-ago period. 
  • HPE raised its EPS outlook for the 2019 fiscal year, which ends in September, from $0.73 to $0.83 on a GAAP basis, to $0.88 to $0.98. On an adjusted basis, HPE said it now expects EPS of $1.56 to $1.66, compared to its previous estimate of $1.51 to $1.61. 
  • HPE also reiterated its FY19 free cash flow guidance of $1.4 billion to $1.6 billion. 

Notably, HPE took a huge hit to its EPS on a GAAP basis for the quarter, reporting $0.13 per share — down 86% from the prior-year period. However, HPE says that this is related to changes in tax law that were passed in 2017.

Earlier in February, HPE CEO Antonio Neri told Business Insider that he was staking the future of the 80-year-old company on so-called edge computing, which refers to the notion of putting more data processing power on smart devices, rather than the cloud. So it's good news for HPE, too, that it posted revenues in its Intelligent Edge business unit of $686 million, up 5% from the same period of 2017. 

However, things are less rosy for the company's flagship Hybrid IT unit, which encompasses HPE's bread-and-butter server and storage data center hardware businesses, as well as its push into the so-called hybrid cloud. That unit posted $6 billion in revenue, down 3% from the year-ago period.

"Looking forward, we are confident that HPE’s differentiated, software-defined solutions will continue to gain traction with customers looking to harness the explosion of data, driving accelerated revenue growth starting in Q2," Neri said in a statement. 

SEE ALSO: The CEO of Hewlett Packard Enterprise tells us why the company is 'under-appreciated' and how it can beat Amazon in a market that's bigger than cloud computing

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NOW WATCH: Roger Stone explains what Trump has in common with Richard Nixon

Zillow's CEO is out (ZG)

Thu, 02/21/2019 - 5:06pm  |  Clusterstock

  • Zillow shares fell in after-hours trading Thursday after the company said CEO Spencer Rascoff was leaving his post. Rascoff will remain on the board of directors.
  • The real-estate database company named Rich Barton, its cofounder and executive chairman, as its new CEO. 
  • Zillow shares have plunged 31% in one year.
  • Watch Zillow trade live.

Shares of the real-estate database company Zillow fell as much as 6.5% to $32.78 in after-hours trading Thursday after the company reported fourth-quarter earnings and announced a management shuffle. 

Zillow said Rich Barton, the company's cofounder and executive chairman, would return as CEO, replacing Spencer Rascoff. Barton was CEO from the company's founding in 2005 until 2010. Rascoff will stay on the board of directors and cofounder Lloyd Frink will become executive chairman.

Here's what the company reported, compared with estimates from analysts surveyed by Bloomberg.

  • Adjusted earnings per share: $0.01 per share versus $0.02 expected.
  • Revenue: $365.3 million versus $351.2 million expected.

The stock was little changed after investors digested the results. Zillow shares plunged 31% over the past year as the company entered into the mortgage-lending space.

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Goldman Sachs doesn't think Apple can compete with Samsung's new foldable phone

Thu, 02/21/2019 - 4:45pm  |  Clusterstock

  • If foldable smartphones become popular after Samsung's Galaxy Fold launch, Apple may struggle to keep up with Samsung, according to a new analyst note from Goldman Sachs.
  • But the fact that Samsung has not allowed anyone to examine or use the Galaxy Fold could mean it's not ready yet.
  • Apple relies on Samsung to produce the displays for its high-end iPhones.

Apple and Samsung may offer similar features when it comes to their flagship smartphones — both the latest  iPhones and Galaxy phones include edge-to-edge displays and facial recognition, for example. But when it comes to foldable phones, Samsung will hold a significant lead in the near term, according to a team of Goldman Sachs analysts led by Rod Hall.

In a note published on February 20, the firm called Samsung's newly introduced $1,980 Galaxy Fold "the main potential challenge" for Apple in the ultra-high-end smartphone market. "In terms of competition for Apple we see the Fold as the main potential challenge in the ultra high-end with a compelling form factor that only Samsung's foldable OLED technology can deliver in our opinion," the note said. 

Samsung on Wednesday unveiled its highly anticipated foldable phone along with its new Galaxy S10 lineup and wearable devices. The Galaxy Fold, which launches on April 26, is a smartphone with a 4.6-inch screen that unfolds to become a 7.3-inch tablet. Samsung demonstrated how this extra screen real estate could be used by showcasing the Fold's ability to display three apps simultaneously. The electronics maker also showed how apps running on the Fold will be able to transition between phone and tablet mode.

Although Samsung demonstrated the device on stage, it did not allow media attendees to try the Fold after the event, which Goldman also flagged as a cause for concern.  

But if Samsung's new foldable form factor does prove to be a hit, Goldman believes it may postpone Apple from accessing the necessary display technology for use in its iPhones. "We see this as challenging for Apple who could find themselves with no access to the critical flexible OLED technology for which we believe Samsung has at least a two year lead over other display competitors," the note said.

Apple relies on Samsung to supply the OLED displays it uses for high-end iPhones, such as the iPhone XS and iPhone XS Max. The company is said to be making an effort to reduce its dependence on Samsung and has reportedly begun working with LG to supply smartphone displays, according to Bloomberg. Apple is expected to release three new iPhones this fall, The Wall Street Journal reported, including a successor to the lower-priced iPhone XR. 

Goldman's 12-month $140 price target for Apple remained unchanged.

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NOW WATCH: Apple forever changed the biggest tech event of the year by not showing up

These are the four transformations payments providers must undergo to survive digitization

Thu, 02/21/2019 - 4:34pm  |  Clusterstock

This is a preview of a detailed slide deck from Business Insider Intelligence, Business Insider's premium research service. Click here to learn more. Current subscribers can view the deck  here.

Rising smartphone penetration, regulations pushing users away from cash, and globalization demanding faster and new ways to transact are leading to a swell in noncash payments, which Business Insider Intelligence expects to grow to 841 billion transactions by 2023.

This shift has created a greenfield opportunity in the space. Legacy providers are working to leverage their scale as they update their infrastructure and adapt their business models. But at the same time, upstarts are using their strengths in user experience to try to disintermediate or beat out those at the forefront of the space — a dichotomy that’s creating crowding and competition.

Digitization and crowding in the payments space will force companies that want to emerge atop the ecosystem to undergo four critical digital transformations: diversification, consolidation and collaboration, data protection, and automation. Those that do this effectively, and use these shifts as a means of achieving scale without eroding the user experience, will be in the best position to use ongoing digitization in their payments space to their advantage.

In The Future Of Payments 2018, Business Insider Intelligence takes a look at some of the biggest problems digitization and crowding are causing for payments firms, outlines the key transformations players can make going forward to resolve them, and explores areas where firms have already begun to use these transformations to their advantage.

Get The Future of Payments

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A lawsuit is giving us the first hints of how Amazon, Berkshire Hathaway, and JPMorgan are planning to upend the US healthcare system

Thu, 02/21/2019 - 4:19pm  |  Clusterstock

  • JPMorgan, Amazon, and Berkshire Hathaway in 2018 launched a joint healthcare venture that's aimed at lowering healthcare costs for the companies' employees, but they haven't shared many details about their plans.
  • That's starting to change, thanks to a lawsuit filed in Massachusetts against a former Optum employee who was hired by the venture. Optum is the health-services arm of the healthcare giant UnitedHealth Group.
  • In unsealed testimony, Jack Stoddard, the venture's chief operating officer, shared where the company's focus will be in 2019. 

With one announcement, Amazon, Berkshire Hathaway, and JPMorgan got the $3.6 trillion US healthcare system worked up into a tizzy. 

In January 2018, the three companies said they would strike up a joint healthcare venture that's aimed at lowering healthcare costs for the companies' employees. At the time, news of the partnership sent healthcare stocks plummeting, especially health insurers and members of the pharmaceutical supply chain that might be impacted by the three business giants getting into their lines of work.

Since then, we haven't learned much more about what shape the joint venture will take. Most of what we've learned about the unnamed venture is some of the key hires, such as Dr. Atul Gawande as CEO and Jack Stoddard as chief operating officer.

That's starting to change, thanks to a lawsuit filed in Massachusetts against a former Optum employee. Optum is the health-services arm of the healthcare giant UnitedHealth Group.

The lawsuit, filed on January 16, came out a day before David Smith, a former senior executive at Optum, was scheduled to start working at the joint venture as its director of product strategy and research. The complaint said that by joining the health venture, Smith is in breach of contract and could reveal Optum's trade secrets. 

A representative for the Amazon-Berkshire-JPMorgan venture declined to comment on the case.

Testimony in the case from Stoddard, who joined the venture in September, provides new information about the venture's plans. The testimony was unsealed after a motion brought by the parent companies of Stat News and The Wall Street Journal.

So far, the venture has hired fewer than 20 people, Stoddard said. The team that Smith joined is comprises business-school graduates who have backgrounds in consulting. Stoddard said his role has been to do a lot of hiring and recruiting.

Stoddard was most recently the general manager for digital health at Comcast before joining the venture. He previously worked as the COO at Accolade, a company that helps employees navigate their health benefits, and was on the executive team when Optum was founded. 

The joint healthcare venture's mandate

The venture will oversee the $4 billion that Amazon, Berkshire Hathaway, and JPMorgan spend each year on healthcare for their roughly 1 million employees and dependents. Stoddard said the plan is to partner with existing companies when possible rather than build new products to improve the companies' healthcare.

"We've been asked to look at the full spectrum of what are the options, how can we crack the code, who can we have partner with, and how can we derive better outcomes, in the order of better experience, better quality and then lower costs," Stoddard said. 

In particular, there are six areas Stoddard and his team have been asked to get to the bottom of: why getting primary care is a challenge, why it's hard to understand healthcare costs, why health insurance is complicated, why there's a disparity between how much employers spend on healthcare and the experience their employees have using it, why employees are frustrated, and why healthcare costs keep going up. 

The venture's commitment, he said, is to employees over anyone else. "We are not trying to create value for shareholders," Stoddard said. "We're trying to create value for families who are trying to use the health care system."

Where the venture's starting

Stoddard said the venture's focus for 2019 will be to deploy tests of programs through partnerships with other companies. For example, one of the first tests the venture might run is to simplify health benefits for a select group of workers.

The test could knock out some of the complexity that exists in a traditional health plan, offer easier ways to get care, or make drugs prescribed to treat chronic conditions less expensive. If the tests are successful, JPMorgan, Berkshire Hathaway, and Amazon could expand them to more of their workers. 

Beyond that, Stoddard said the venture is studying how pharmacies work to get to the bottom of what employers should actually be spending on a particular drug, which can be varied based on where their employee picks up a prescription

"You can imagine our employers are — just given who supports us — are incredibly allergic to market inefficiencies," Stoddard said.

Stoddard also said he doesn't think the healthcare joint venture is a competitor to Optum or other existing healthcare companies, even if the initial announcement had caused healthcare stocks to plummet and rampant speculation about what the venture might address.

However, he said he understood why incumbent healthcare companies — many of which count Amazon, Berkshire Hathaway, and JPMorgan among their customers — might feel threatened. 

"I can understand why, when their customers create our entity and put them on notice that the status quo is no longer good enough, that there is a fear of change. So I understand that," Stoddard said. "But that is not competitive to their business. It is about finding new solutions for our employees and their families."

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Pinterest has reportedly filed for an IPO that could value the company at $12 billion

Thu, 02/21/2019 - 4:06pm  |  Clusterstock

  • Pinterest has filed a confidential S-1 and has its eye on a June IPO, according to The Wall Street Journal.
  • The company hired Goldman Sachs and JPMorgan Chase as its lead banks, according to the report.
  • The company could seek a valuation of $12 billion, according the report. It was last privately valued at $12.3 billion in a 2017 funding round.

Pinterest, the social-media site where people "pin" images and seek inspiration, has confidentially filed to go public, according to The Wall Street Journal.

The company, which reportedly interviewed bankers in January, is working with Goldman Sachs and JPMorgan Chase on the IPO, according to the report.

The company is seeking to go public around June at a valuation of at least $12 billion, according to The Journal. 

Pinterest was last valued at $12.3 billion in a 2017 funding round.

Founded in 2008, Pinterest is the latest Silicon Valley unicorn to seek a 2019 IPO. This could be a record year thanks to the massive valuations garnered by these startups on the private markets.

Hiding ride-hailing unicorns Lyft and Uber are both reportedly on track to hit the public markets in the upcoming months. And if all goes as planned, they will be joined by the enterprise-collaboration platform Slack, which announced that it had confidentially filed, as well as others such as PagerDuty and Zoom.

SEE ALSO: Pinterest has nabbed Google and Alibaba's former head of investor relations — the biggest sign yet that it's gearing up for a 2019 IPO

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Trump's possible national-security tariffs on autos would be socialism at its worst. Here's why they're bad for America. (F, GM, FCAU, TSLA)

Thu, 02/21/2019 - 3:50pm  |  Clusterstock

  • The Trump administration has investigated whether auto imports are a threat to national security.
  • If they are, Trump could slap a 25% tariff on imported cars and car parts.
  • The goal would theoretically be to bolster domestic automakers Ford, GM, FCA, and Tesla
  • And that would be industrial socialism.

The Trump Commerce Department has finished its review of whether imported cars and cars parts are a national security threat.

The findings haven't yet been released, but the President now has 90 days to do what big exporters such as the Germans already think he's going to do: threaten 25% tariffs on vehicles and components coming into the US.

If Trump does go for the tariffs, it would be an excellent example of American socialism in action. 

But before we get to that, in the short term tariffs would simply screw up a car-buying paradise for American consumers. The US auto market is capitalism at its finest, refined to a state of near-perfection over decades. It unifies everything from labor unions to complicated financial instruments, delighting consumers in the process with a steady flow of new cars, SUVs, and pickups. (Even the bankruptcies and stunning recoveries of both General Motors and Chrysler prove this point, demonstrating that Chapter 11 is a critical part of modern business.)

Read more: Trump's views on the US auto industry are childish and intended only to rally his supporters

It's a joy to behold and it supports four US automakers — GM, Ford, Fiat Chrysler Automobiles, and Tesla — while welcoming competition from the Germans, Japanese, South Koreans, Italians, and increasingly the Chinese, who are taking baby steps into the market.

Short-term, medium-term, and long-term tariff objectives

Let's say the tariffs do get slapped on imports. All that will happen, short-term, is that Americans will have to pay more for cars, and in the medium-term potentially suffer less choice.

So what's the Trump administration's long-term objective?

It doesn't have anything to do with national security. The imports have been coming in for decades and the republic hasn't faced any threats from them. 

It does have to do with Trump trying to tilt the auto market in favor of US workers. Make, say, imported Toyotas more expansive and Americans will buy Fords, and Ford will employ more workers.

It sounds like crude logic because it is. And besides, the negative ripple effects would be felt by other US workers — at dealerships, at repair shops, at the banks that provide financing, at insurance companies. It goes on and on.

That's why you don't mess with capitalist near-perfection.

Unless you want to undertake industrial socialism.

Socialism, Trump-style

Because that's what Trump's tariffs would do, more directly than indirectly. No, the government wouldn't be seizing the means of production. But it would be using trade policy to manipulate the industrial situation, and it would be entering the market to curtail choice, thereby encouraging the emergence of more monopolistic carmakers. (Remember, in the 1950s when GM as at its height, one of every two cars sold rolled out of a GM factory.)

What about the counterargument that countries exporting vehicles to the US are taking advantage of a trade imbalance? Wouldn't a Trump deal, provoked by tariffs, open up foreign markets?

Not really. US automakers are struggling with a flat European market and US brands have never been a factor in Japan. GM's Chevy is the number two brand in South Korea, but GM builds the cars there. Again, Trump — no genius when it comes to the 21st-century car business, as he's repeatedly shown — doesn't grasp that for, say, Ford to have a bigger export business to Europe, it has to invest a huge amount of money supporting that business. 

The crux of the matter is that the Ford, GM, and FCA are selling lots of profitable pickups and SUVs at this point, so anything that undermines the US market is bad. Inducing a recession, for instance.

Of course, you don't have to ratchet Trump's motives very far to see that he wants to use tariff power as way to force US industry in a direction that benefits himself, in a blunt political sense, and part of his base, a small number of voters concentrated states where US carmakers build vehicles. 

So is it socialism by another name? Industrial policy or simply tough talk for trading partners who aren't playing by the rules?

Nope. It's socialism. And worse, it's socialism undertaken in the false pretense of national security. 

Flag-waving American socialism, Trump-style. And beyond politics, it's just bad business. 

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NOW WATCH: 8 key takeaways from Trump's State of the Union address

The CEO of Careem explains how the company is scaling up to beat Uber in a quickly growing market

Thu, 02/21/2019 - 3:31pm  |  Clusterstock

  • Careem, a Middle East-based ride-hailing service, is hoping to stave off Uber's global expansions. 
  • CEO Mudassir Sheikha spoke to Business Insider about the company's advances on driver safety, deliveries, and more. 
  • The company is betting its investments in mapping thousands of miles of road in the region will give it a leg up on any global competitors. 

When the founder of Careem, a Dubai-based ride-hailing company, traveled to his hometown of Karachi in Pakistan, his own mother urged him not to use the app to travel from the airport.

"She's like, this is not safe. People will know where you live!," CEO Mudassir Sheikha told Business Insider in an interview.

Such attention to regional concerns and cultural nuances has underpinned the company's growth to now cover more than 120 cities in the region, from Morocco to Pakistan — and what Sheikha hopes will be enough to keep global competitors, namely Uber, from dominating the Middle East like it has so many other markets.

But scaling up a unicorn company in a region relatively removed from the world's tech startup scene hasn't been without its quirks. Cash, for one thing, still rules the region's consumer marketplaces, while security and background check processes aren't as simple as they might be when building a product in the West.

"If you land in a place like Dubai it feels very much like a Singapore or a London or maybe even a New York," Sheikha said. "The hard infrastructure is remarkable. But when it comes to soft infrastructure, things like customer service and technology platforms is quite lacking.

"A lot of the building blocks you need to enable a service like Careem — such as maps or payments systems — you almost take them for granted [in developed markets]," said Sheikha, who met his cofounder, Magnus Olsson, in Dubai while both on assignment for the consulting firm McKinsey

74,000 kilometers of roads to map

Google Maps exists in most of the markets Careem operates in, but in many cases it's crowd-sourced and littered with inaccuracies. That's a problem when your main product involves shuttling people between places.

"We not only had to build mapping infrastructure, we had to build our own places database because Google was not complete nor reliable," Sheikha said.

"Neighborhood by neighborhood we have actually gone into our cities and mapped every building, every villa, and every shopping mall in order to provide an accurate location for pickups and dropoffs."

Where Google Maps might be able to give you a street name, Sheikha says Careem can show you the exact Villa where you are being dropped off or picked up.

Cash is still king in the Middle East

Careem also had to build out a payment infrastructure for the Middle East, where cash still makes up a majority of payments by consumers. Having drivers — called captains, out of respect — carry loads of cash is a huge liability, and getting the company's cut back to its coiffures was even trickier.

"Cash might seem like a simple option in the app, but to enable it at scale required a lot of work, Sheikha explained.

The company assigns credit limits to captains based on their history driving on the platform. Those limits decide how much cash one driver can collect before having to deposit the company's cut. Careem's algorithm can then prioritize credit card trips to let the accounting work out for commissions.

Drivers can also arrange a rendezvous to move cash, in a move that could foreshadow Careem's plans to enter the payments and remittances space, a huge industry in the region.

"We’re creating a collection system through our own captains," Sheikha said. "Let’s say you are new and I’m an old captain and have a lot more credit history than you do. If you get blocked because your limit has been hit and you need to give the money to Careem, you can give me your $20 that you need to give Careem and continue to take fares."

The safety issue might be trickier

Multiple Careem drivers have been killed in recent months, and Sheikha spoke candidly about how the company is working to improve safety for both riders and drivers. Background checks, while not automated like many in the US, are exhaustive.

"Before we on-board a captain in Pakistan, they go through a three-point background check," Sheika said. "We literally go to their house and put a GPS coordinate on it. Most people here come from villages but are working in the city so we do the same and put a GPS pin on their home in the village. We ask the local police station, ask the local shop owner [for references]."

Many of the same things customers have come to expect from a US ride-hailing company are also available for Careem captains, like an emergency button and special hotline for support. Many Uber drivers in the US have complained there is often no direct way to reach the company when issues arise, and cases can take weeks to sort through.

"Safety has become paramount for us," Sheika said

Delivery has always been huge in the Middle East

And Careem is hoping it can tap into an already booming market.

"We have a region that has relatively high levels of unemployment, labor is relatively cheap, and our infrastructure is relatively congested and inconvenient," Sheikha said. "Almost all restaurants, superstores, pharmacies are already doing deliveries. Delivery is already a big part of the middle eastern lifestyle."

That's in direct contrast to the US, where — with the exception of New York — many restaurants' first delivery options have been through service like UberEats or GrubHub.

"The aspiration is the bring all this convenience in a more streamlined way," Sheikha said. "Our view is if we can start migrating some of the traditional ways that people have been using deliveries into a more consistent and reliable experience."

All of this, taken together, should be enough for Careem to stave off Uber, which is quickly encroaching on its territory as it continues to grow and rockets toward an initial public offering in the US this year.

So far, it's in roughly 20 cities in the region, and Sheikha is betting the foundation his team has laid can maintain its market share dominance throughout the Middle East.

"For a global to come in a start providing a service to the top 2% to 3% of the population is not difficult, they’re used to the convenience," Sheikha said. "But as soon as you start going down the masses, you require a lot of tailoring."

For example, "It took Uber almost 2 years to realize that very few people in this region have a credit card," he said. "That's a very basic thing. It's 101 in this region."

There were reports in 2018 that Uber was in talks to buy Careem for its current valuation near $2 billion which did not pan out. For now, Sheikha seems content with Careem holdings its own — and says the company has the cash and ambition to continue to grow.

"We are continuing to fundraise," he said. "We have enough cash on hand to fund our business plan, but our ambition keeps on getting bigger so we are getting into more things than initially anticipated."

SEE ALSO: The CEO of one of Uber and Lyft's hottest rivals reveals why the DNA of his company is fundamentally different from its competitors' and how it can replace the private car

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The Payment Industry Ecosystem: The trend towards digital payments and key players moving markets

Thu, 02/21/2019 - 3:06pm  |  Clusterstock

This is a preview of a research report from Business Insider Intelligence. Current subscribers can read the report here.

The digitization of daily life is making phones and connected devices the preferred payment tools for consumers — preferences that are causing digital payment volume to blossom worldwide.

As noncash payment volume accelerates, the power dynamics of the payments industry are shifting further in favor of digital and omnichannel providers, attracting a wide swath of providers to the space and forcing firms to diversify, collaborate, or consolidate in order to capitalize on a growing revenue opportunity.

More and more, consumers want fast and simple payments — that's opening up opportunities for providers. Rising e- and m-commerce, surges in mobile P2P, and increasing willingness among customers in developed countries to try new transaction channels, like mobile in-store payments, voice and chatbot payments, or connected device payments are all increasing transaction touchpoints for providers.

This growing access is helping payments become seamless, in turn allowing firms to boost adoption, build and strengthen relationships, offer more services, and increase usage.

But payment ubiquity and invisibility also comes with challenges. Gains in volume come with increases in per-transaction fee payouts, which is pushing consumer and merchant clients alike to seek out inexpensive solutions — a shift that limits revenue that providers use to fund critical programs and squeezes margins.

Regulatory changes and geopolitical tensions are forcing players to reevaluate their approach to scale. And fraudsters are more aggressively exploiting vulnerabilities, making data breaches feel almost inevitable and pushing providers to improve their defenses and crisis response capabilities alike.

In the latest annual edition of The Payments Ecosystem Report, Business Insider Intelligence unpacks the current digital payments ecosystem, and explores how changes will impact the industry in both the short- and long-term. The report begins by tracing the path of an in-store card payment from processing to settlement to clarify the role of key stakeholders and assess how the landscape has shifted.

It also uses forecasts, case studies, and product developments from the past year to explain how digital transformation is impacting major industry segments and evaluate the pace of change. Finally, it highlights five trends that should shape payments in the year ahead, looking at how regulatory shifts, emerging technologies, and competition could impact the payments ecosystem.

Here are some key takeaways from the report:

  • Behind the scenes, payment processes and stakeholders remain similar. But providers are forced to make payments as frictionless as possible as online shopping surges: E-commerce is poised to exceed $1 trillion — nearly a fifth of total US retail — by 2023.
  • The channels and front-end methods that consumers use to make payments are evolving. Mobile in-store payments are huge in developing markets, but approaching an inflection point in developed regions where adoption has been laggy. And the ubiquity of mobile P2P services like Venmo and Square Cash will propel digital P2P to $574 billion by 2023.
  • The competitive landscape will shift as companies pursue joint ventures to grow abroad in response to geopolitical tensions, or consolidate to achieve rapid scale amid digitization.
  • Fees, bans, steering, or regulation could impact the way consumers pay, pushing them toward emerging methods that bypass card rails, and limit key revenue sources that providers use to fund rewards and marketing initiatives.
  • Tokenization will continue to mainstream as a key way providers are preventing and responding to the omnipresent data breach threat.

The companies mentioned in the report are: CCEL, Adyen, Affirm, Afterpay, Amazon, American Express, Ant Financial, Apple, AribaPay, Authorize.Net, Bank of America, Barclays, Beem It, Billtrust, Braintree, Capital One, Cardtronics, Chase Paymentech, Citi, Discover, First Data, Flywire, Fraedom, Gemalto, GM, Google, Green Dot, Huifu, Hyundai, Ingenico, Jaguar, JPMorgan Chase, Klarna, Kroger, LianLian, Lydia, Macy’s, Mastercard, MICROS, MoneyGram, Monzo, NCR, Netflix, P97, PayPal, Paytm, Poynt, QuickBooks, Sainsbury’s, Samsung, Santander, Shell, Square, Starbucks, Stripe, Synchrony Financial, Target, TransferWise, TSYS, UnionPay, Venmo, Verifone, Visa, Vocalink, Walmart, WeChat/Tencent, Weebly, Wells Fargo, Western Union, Worldpay, WorldRemit, Xevo, Zelle, Zesty, and ZipRecruiter, among others

In full, the report:

  • Explains the factors contributing to a swell in global noncash payments
  • Examines shifts in the roles of major industry stakeholders, including issuers, card networks, acquirer-processors, POS terminal vendors, and gateways
  • Presents forecasts and highlights major trends and industry events driving digital payments growth
  • Identifies five trends that will shape the payments ecosystem in the year ahead

SEE ALSO: These are the four transformations payments providers must undergo to survive digitization

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